Press Releases

- LINZESS® (linaclotide) U.S. net sales
increased 34% to $150.5 million in 2Q 2016 over 2Q 2015; net profit for
the brand increased to $58 million from $15 million -

- On track to launch two priority franchise products: ZURAMPIC®
(lesinurad) in October 2016 for hyperuricemia associated with
uncontrolled gout and 72 mcg linaclotide in early 2017 for chronic
idiopathic constipation -

"During the second quarter of 2016, Ironwood continued to deliver strong
operational performance, resulting in a near-doubling of Ironwood
revenue, year-over-year. We are well-positioned to advance our four
priority franchises, including the launch of two new products in the
next nine months, and we remain on track to become cash flow positive in
2018," said Peter Hecht, chief executive officer of Ironwood. "Our
flagship product LINZESS demonstrated solid growth as the branded
prescription market leader in adult patients with IBS-C or CIC and is on
track to exceed $1 billion in net sales by 2020, with increased
commercial margins driven by strong demand."

LINZESS.U.S. net sales, as provided by Ironwood's U.S.
collaboration partner Allergan, were $150.5 million in the second
quarter of 2016, a 34% increase compared to the second quarter of
2015. Ironwood and Allergan share equally in brand collaboration
profits or losses.

More than 650,000 total LINZESS prescriptions were filled in the
second quarter of 2016, a 29% increase compared to the second
quarter of 2015, according to IMS Health. Since launch, more than
5 million prescriptions for LINZESS have been filled by more than
1 million unique patients, making LINZESS the branded prescription
market leader in IBS-C and CIC.

Net profit for the LINZESS U.S. brand collaboration, including
commercial and research and development (R&D) expenses, was $58.3
million in the second quarter of 2016, a 289% increase compared to
the second quarter of 2015. LINZESS commercial margin was 52% in
the second quarter of 2016, compared to 31% in the second quarter
of 2015.

Ironwood and Allergan expect to launch a 72 mcg dose of
linaclotide in early 2017 that, if approved, can increase
physician prescribing of LINZESS within the large, heterogeneous
adult CIC patient population. The companies announced during the
second quarter of 2016 that the U.S. Food & Drug Administration
(FDA) accepted the supplemental new drug application filing for
this dose.

Linaclotide Colonic Release. Ironwood and Allergan completed
enrollment in a Phase IIb clinical trial and expect data later this
year; if positive, the companies anticipate initiating a Phase III
trial in 2017. This second-generation guanylate cyclase-C (GC-C)
agonist product candidate has the potential, if approved, to provide
greater and faster abdominal pain relief in adult IBS-C patients,
expand the IBS-C and CIC markets, and extend patent protection to the
mid-2030s.

Uncontrolled Gout Franchise

ZURAMPIC. Ironwood expects to launch FDA-approved ZURAMPIC in
October 2016 for use in combination with a xanthine oxidase inhibitor
(XOI) for the treatment of hyperuricemia associated with uncontrolled
gout. Gout is a form of inflammatory arthritis, and an estimated two
million patients in the U.S. suffer from uncontrolled gout in which
traditional first-line XOI treatment alone is not sufficient to
achieve target serum uric acid (sUA) levels. Many of these patients
experience painful flares due to hyperuricemia despite treatment with
an XOI. In two Phase III clinical trials, the combination of the XOI
allopurinol, which decreases production of uric acid, and ZURAMPIC,
which increases excretion of uric acid, demonstrated nearly a two-fold
increase in the percentage of patients reaching target serum uric acid
levels under 6 mg/dL over allopurinol alone at month six. ZURAMPIC is
not recommended for the treatment of asymptomatic hyperuricemia and
should not be used as monotherapy. Ironwood closed the transaction
with AstraZeneca for the exclusive U.S. rights to all products
containing lesinurad during the second quarter of 2016.

Lesinurad-allopurinol fixed-dose combination product. The
fixed-dose combination oflesinurad and allopurinol is expected
to be submitted for FDA review during the second half of 2016.

Refractory Gastroesophageal Reflux Disease
(rGERD) Franchise

IW-3718.Ironwood continues to enroll patients in a
dose-ranging Phase IIb clinical trial of IW-3718, a wholly-owned asset
for the potential treatment of rGERD. Data are expected in 2017.
IW-3718 is a novel, investigational gastric retentive formulation of a
bile acid sequestrant designed to work with a proton pump inhibitor
(PPI) to reduce the detrimental effects of bile and acid on the
esophagus. An estimated 10 million people in the U.S. suffer from
rGERD and continue to experience heartburn symptoms despite treatment
with PPIs.

Vascular and Fibrotic Franchise

IW-1973. Ironwood generated positive topline data from its
Phase Ib multiple ascending dose study of IW-1973. The data were
consistent with previous preclinical and Phase Ia findings and support
advancement of IW-1973 into Phase II clinical trials, expected to
begin later this year. Specifically, in the Phase Ib study, IW-1973
demonstrated characteristics that Ironwood believes could be important
pharmacokinetic differentiators in the field of soluble guanylate
cyclase (sGC) stimulators, including a narrow peak-to-trough ratio
indicative of the potential to maintain a durable and consistent
therapeutic effect; a profile that indicates suitability for
once-daily dosing; and a volume of distribution consistent with
penetration beyond the vasculature and into the tissues.

IW-1701.Ironwood completed enrollment in a Phase Ib
multiple ascending dose study, with data expected later this year and
a Phase II trial expected to begin before year-end.

Global Collaborations and Partnerships

Linaclotide is currently under review by the Pharmaceuticals and
Medical Devices Agency (PMDA) in Japan for potential approval for the
treatment of adult patients with IBS-C. Additionally, Ironwood's
partner Astellas Pharma Inc. initiated a Phase III clinical trial of
linaclotide in Japan for adults with chronic constipation.

Ironwood continued co-promoting Allergan's VIBERZI™ (eluxadoline) for
adults suffering from IBS with diarrhea (IBS-D) and Exact Sciences'
Cologuard® noninvasive stool DNA screening test for
colorectal cancer, in the U.S.

Corporate and Financials

Collaborative Arrangements Revenue

Collaborative arrangements revenue was $54.4 million in the second
quarter of 2016, compared to $27.7 million in the second quarter
of 2015. Revenue primarily consisted of $48.3 million in revenue
associated with Ironwood's share of the net profits from the sales
of LINZESS in the U.S., compared to $24.3 million in the second
quarter of 2015.

Operating Expenses

Operating expenses were $69.7 million in the second quarter of
2016, compared to $61.6 million in the second quarter of
2015. Operating expenses in the second quarter of 2016 consisted
of $31.7 million in R&D expenses; $36.9 million in selling,
general and administrative (SG&A) expenses; and $1.1 million in
acquired intangible asset amortization expenses resulting from
Ironwood's U.S. licensing agreement with AstraZeneca for the
exclusive rights to all products containing lesinurad.

Other Expense

Interest Expense. Net interest expense was $9.5 million in
the second quarter of 2016, in connection with the $175 million
debt financing executed in January 2013 and the approximately $336
million convertible debt financing executed in June 2015. Interest
expense recorded in the second quarter of 2016 includes $6.2
million in cash expense and $3.6 million in non-cash expense. Both
the cash and non-cash components of the 2022 convertible notes are
recorded quarterly.

Gain/Loss on Derivatives. Ironwood records a gain/loss on
derivatives related to the change in fair value of the convertible
note hedges and note hedge warrants issued in connection with the
convertible debt financing in June 2015. A gain on derivatives of
$3.1 million was recorded in the second quarter of 2016.

Net Loss

GAAP net loss was $21.7 million, or $0.15 per share, in the second
quarter of 2016, compared to $48.0 million, or $0.34 per share, in
the second quarter of 2015.

Non-GAAP net loss was $23.8 million, or $0.16 per share, in the
second quarter of 2016, compared to $47.8 million, or $0.34 per
share, in the second quarter of 2015.Non-GAAP net loss
excludes the impact of mark-to-market adjustments on the
derivatives related to Ironwood's convertible debt and the
amortization of acquired intangible assets related to Ironwood's
U.S. lesinurad license. See Non-GAAP Financial Measures below.

Cash Position

Ironwood ended the second quarter of 2016 with $325 million of
cash, cash equivalents and available-for-sale securities, a
decrease of $109 million from the end of the first quarter of
2016. This figure includes the $100 million upfront payment to
AstraZeneca from cash on hand under the lesinurad licensing
agreement. Cash used in operations was $6 million, a 77% decline
from the $26 million used during the same period a year ago.

2016 Financial Guidance

With the completion of its U.S. licensing transaction for all products
containing lesinurad and support of the anticipated launch of
FDA-approved ZURAMPIC in October 2016, Ironwood is updating its guidance
for 2016. Ironwood expects:

R&D expenses to fall within a range of $140 million to $150 million,
(previously $130 million to $145 million),

SG&A expenses to fall within a range of $170 million to $180 million,
(previously $125 million to $140 million), and

Amortization of intangible assets to be $8 million (not applicable
prior to the U.S. lesinurad license).

Consistent with its guidance following the announcement of the U.S.
lesinurad license, Ironwood continues to expect to use less than $70
million in cash for operations in 2016.

Allergan and Ironwood continue to expect total 2016 marketing and sales
expenses for LINZESS to be in the range of $230 million to $260 million,
and the companies now expect these expenses to be in the mid to higher
end of this range.

Non-GAAP Financial Measures

The company presents non-GAAP net loss and non-GAAP net loss per share
to exclude the impact of net gains and losses on the derivatives related
to our convertible notes that are required to be marked-to-market, and
the amortization of acquired intangible assets. The derivative gains and
losses may be highly variable, difficult to predict and of a size that
could have a substantial impact on the company's reported results of
operations in any given period. The acquired intangible assets are
valued at the time of acquisition and are amortized over their estimated
economic useful life, and management believes excluding the amortization
of acquired intangible assets provides more consistency with internally
developed intangible assets for which research and development costs
were previously expensed. The company has presented non-GAAP net loss
and non-GAAP net loss per share in prior calendar quarters, and this is
the first calendar quarter in which the company has amortization of
acquired intangible assets that can be excluded from such non-GAAP
financial measures. Management believes this non-GAAP information is
useful for investors, taken in conjunction with Ironwood's GAAP
financial statements, because it provides greater transparency and
period-over-period comparability with respect to Ironwood's operating
performance. These measures are also used by management to assess the
performance of the business. Investors should consider these non-GAAP
measures only as a supplement to, not as a substitute for or as superior
to, measures of financial performance prepared in accordance with GAAP.
In addition, these non-GAAP financial measures are unlikely to be
comparable with non-GAAP information provided by other companies. For a
reconciliation of these non-GAAP financial measures to the most
comparable GAAP measures, please refer to the table at the end of this
press release.

Conference Call Information

Ironwood will host a conference call and webcast at 4:30 p.m. Eastern
Time, on Thursday, August 4, to discuss its second quarter of 2016
results and recent business activities. Individuals interested in
participating in the call should dial (877) 643-7155(U.S. and
Canada) or (914) 495-8552 (international) using conference ID number
49646361. To access the webcast, please visit the Investors section of
Ironwood's website at www.ironwoodpharma.com
at least 15 minutes prior to the start of the call to ensure adequate
time for any software downloads that may be required. The call will be
available for replay via telephone starting at approximately 7:30 p.m.
Eastern Time, on August 4, running through 11:59 p.m. Eastern Time on
August 11, 2016. To listen to the replay, dial (855) 859-2056 (U.S. and
Canada) or (404) 537-3406 (international) using conference ID number
49646361. The archived webcast will be available on Ironwood's website
for 14 days beginning approximately one hour after the call has
completed.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (NASDAQ: IRWD) is a commercial biotechnology
company focused on creating medicines that make a difference for
patients, building value for our fellow shareholders, and empowering our
passionate team. We are advancing a pipeline of innovative medicines in
areas of significant unmet need, including irritable bowel syndrome with
constipation (IBS-C)/chronic idiopathic constipation (CIC), uncontrolled
gout, refractory gastroesophageal reflux disease, and vascular and
fibrotic diseases. We discovered, developed and are commercializing
linaclotide, the U.S. branded prescription market leader in the
IBS-C/CIC category, and we are applying our proven R&D and commercial
capabilities to advance multiple internally-developed and
externally-accessed product opportunities. Ironwood was founded in 1998
and is headquartered in Cambridge, Mass. For more information, please
visit www.ironwoodpharma.com
or www.twitter.com/ironwoodpharma;
information that may be important to investors will be routinely posted
in both these locations.

About LINZESS (linaclotide)

LINZESS® is the first and only guanylate cyclase-C (GC-C) agonist
approved by the FDA and is indicated for the treatment of both irritable
bowel syndrome with constipation (IBS-C) and chronic idiopathic
constipation (CIC) in adults. LINZESS is a once-daily capsule that helps
relieve the abdominal pain and constipation associated with IBS-C, as
well as the constipation, infrequent stools, hard stools and incomplete
evacuation associated with CIC. The recommended dose is 290 mcg for
IBS-C patients and 145 mcg for CIC patients. LINZESS should be taken at
least 30 minutes before the first meal of the day.

LINZESS is thought to work in two ways based on nonclinical studies.
LINZESS binds to the GC-C receptor locally, within the intestinal
epithelium. Activation of GC-C results in increased intestinal fluid
secretion and accelerated transit and a decrease in the activity of
pain-sensing nerves in the intestine. The clinical relevance of the
effect on pain fibers, which is based on nonclinical studies, has not
been established.

In placebo-controlled Phase III clinical trials of more than 2,800
adults, LINZESS was shown to reduce abdominal pain in IBS-C patients and
increase bowel movement frequency in both IBS-C patients and CIC
patients. Improvement in abdominal pain and constipation occurred in the
first week of treatment and was maintained throughout the 12-week
treatment period. Maximum effect on abdominal pain was seen at weeks 6-9
and maximum effect on constipation occurred during the first week. When
a subset of LINZESS-treated patients in the trials were switched to
placebo, they reported their symptoms returned toward pretreatment
levels within one week, while placebo-treated patients switched to
LINZESS reported symptom improvements. LINZESS is contraindicated in
pediatric patients under 6 years of age. The use of LINZESS in pediatric
patients 6 through 17 years of age should be avoided. In nonclinical
studies, administration of a single, clinically relevant adult oral dose
of linaclotide caused deaths due to dehydration in young juvenile mice.
The safety and efficacy of LINZESS in pediatric patients under 18 years
of age have not been established. In adults with IBS-C or CIC treated
with LINZESS, the most commonly reported adverse event was diarrhea.

Ironwood and Allergan plc are co-promoting LINZESS in the United States.
Linaclotide is marketed by Allergan for the treatment of adults with
moderate to severe IBS-C in Europe under the brand name CONSTELLA®.
Ironwood also has partnered with Astellas Pharma Inc. for development
and commercialization of linaclotide in Japan and with AstraZeneca AB
for development and commercialization in China.

About CONSTELLA (linaclotide)

Linaclotide is a guanylate cyclase-C receptor agonist (GCCA) with
visceral analgesic and secretory activities. Linaclotide is a 14-amino
acid synthetic peptide structurally related to the endogenous guanylin
peptide family. Both linaclotide and its active metabolite bind to the
guanylate cyclase-C receptor, on the luminal surface of the intestinal
epithelium. Through its action at GC-C, linaclotide has been shown to
reduce visceral pain and increase GI transit in animal models and
increase colonic transit in humans. Activation of GC-C results in an
increase in concentrations of cyclic guanosine monophosphate (cGMP),
both extracellularly and intracellularly. Extracellular cGMP decreases
pain-fiber activity, resulting in reduced visceral pain in animal
models. Intracellular cGMP causes secretion of chloride and bicarbonate
into the intestinal lumen, through activation of the cystic fibrosis
transmembrane conductance regulator (CFTR), which results in increased
intestinal fluid and accelerated transit.

Linaclotide was discovered by scientists at Ironwood and is marketed by
Allergan plc for the treatment of adults with moderate to severe IBS-C
in Europe under the brand name CONSTELLA.

About ZURAMPIC® (lesinurad) 200mg tablets

ZURAMPIC® (lesinurad) works selectively to complement xanthine oxidase
inhibitors (XOIs) in the treatment of hyperuricemia associated with
uncontrolled gout. ZURAMPIC is not recommended for the treatment of
asymptomatic hyperuricemia and should not be used as monotherapy. XOIs
reduce the production of uric acid; ZURAMPIC increases the excretion of
uric acid. Together, the combination of ZURAMPIC and an XOI provides a
dual mechanism of action that both decreases production and increases
excretion of uric acid, thereby lowering serum uric acid (sUA) levels in
patients who have not achieved target serum uric acid levels with XOI
treatment alone. ZURAMPIC selectively inhibits the function of
transporter proteins uric acid transporter 1 (URAT1) and organic anion
transporter 4 (OAT4), involved in uric acid reabsorption in the kidney.
The safety and efficacy of ZURAMPIC was established in three Phase III
clinical trials that evaluated a once-daily dose of ZURAMPIC in
combination with the XOI allopurinol or febuxostat compared to XOI
alone. The boxed warning for ZURAMPIC states that acute renal failure
has occurred with ZURAMPIC and was more common when ZURAMPIC was given
alone and reinforces that ZURAMPIC should be used in combination with an
XOI.

LINZESS Important Safety Information

WARNING: PEDIATRIC RISK

LINZESS is contraindicated in pediatric patients under 6 years
of age. In nonclinical studies, administration of a single,
clinically relevant adult oral dose of linaclotide caused deaths
due to dehydration in young juvenile mice. Use of LINZESS should
be avoided in pediatric patients 6 through 17 years of age. The
safety and efficacy of LINZESS has not been established in
pediatric patients under 18 years of age.

Contraindications

LINZESS is contraindicated in pediatric patients under 6 years of age.

LINZESS is contraindicated in patients with known or suspected
mechanical gastrointestinal obstruction.

Warnings and Precautions

Pediatric Risk

LINZESS is contraindicated in children under 6 years of age. The
safety and effectiveness of LINZESS in pediatric patients under 18
years of age have not been established. In neonatal mice, increased
fluid secretion as a consequence of GC-C agonism resulted in mortality
within the first 24 hours due to dehydration. Due to increased
intestinal expression of GC-C, children under 6 years of age may be
more likely than older children and adults to develop significant
diarrhea and its potentially serious consequences.

Use of LINZESS should be avoided in pediatric patients 6 through 17
years of age. Although there were no deaths in older juvenile mice,
given the deaths in young juvenile mice and the lack of clinical
safety and efficacy data in pediatric patients, use of LINZESS should
be avoided in pediatric patients 6 through 17 years of age.

Diarrhea

Diarrhea was the most common adverse reaction of LINZESS-treated
patients in the pooled IBS-C and CIC double-blind placebo-controlled
trials. Severe diarrhea was reported in 2% of LINZESS-treated
patients. The incidence of diarrhea was similar in the IBS-C and CIC
populations.

Patients should be instructed to stop LINZESS if severe diarrhea
occurs and to contact their healthcare provider. The healthcare
provider should consider dose suspension and rehydration.

Renal events: Adverse reactions related to renal function have
occurred after initiating ZURAMPIC. A higher incidence was observed at
the 400-mg dose, with the highest incidence occurring with monotherapy
use. Monitor renal function at initiation and during therapy with
ZURAMPIC, particularly in patients with eCLcr below 60 mL/min or with
serum creatinine elevations 1.5 to 2 times the pre-treatment value,
and evaluate for signs and symptoms of acute uric acid nephropathy.
Interrupt treatment with ZURAMPIC if serum creatinine is elevated to
greater than 2 times the pre-treatment value or if there are symptoms
that may indicate acute uric acid nephropathy. ZURAMPIC should not be
restarted without another explanation for the serum creatinine
abnormalities. ZURAMPIC should not be initiated in patients with an
eCLcr less than 45 mL/min.

Cardiovascular events: In clinical trials, major adverse
cardiovascular events (defined as cardiovascular deaths, non-fatal
myocardial infarctions, or non-fatal strokes) were observed with
ZURMAPIC. A causal relationship has not been established.

Adverse Reactions:

Most common adverse reactions with ZURAMPIC (in combination with an
XOI and more frequently than on an XOI alone) were headache,
influenza, blood creatinine increased, and gastroesophageal reflux
disease

Indication and Limitations of Use for ZURAMPIC

ZURAMPIC is a URAT1 inhibitor indicated in combination with an XOI for
the treatment of hyperuricemia associated with gout in patients who have
not achieved target serum uric acid levels with an XOI alone.

ZURAMPIC is not recommended for the treatment of asymptomatic
hyperuricemia

A history of chronic or severe constipation or sequelae from
constipation, or known or suspected mechanical gastrointestinal
obstruction.

Warnings and Precautions

Sphincter of Oddi Spasm:

There is a potential for increased risk of sphincter of Oddi spasm,
resulting in pancreatitis or hepatic enzyme elevation associated with
acute abdominal pain (eg, biliary-type pain) with VIBERZI. These
events were reported in less than 1% of patients receiving VIBERZI in
clinical trials.

Patients without a gallbladder are at increased risk. Consider
alternative therapies before using VIBERZI in patients without a
gallbladder and evaluate the benefits and risks of VIBERZI in these
patients.

Inform patients without a gallbladder that they may be at increased
risk for symptoms of sphincter of Oddi spasm, such as elevated liver
transaminases associated with abdominal pain or pancreatitis,
especially during the first few weeks of treatment. Instruct patients
to stop VIBERZI and seek medical attention if they experience symptoms
of sphincter of Oddi spasm.

Pancreatitis:

There is a potential for increased risk of pancreatitis not associated
with sphincter of Oddi spasm; such events were reported in less than
1% of patients receiving VIBERZI in clinical trials, and the majority
were associated with excessive alcohol intake. All pancreatic events
resolved upon discontinuation of VIBERZI.

Instruct patients to avoid chronic or acute excessive alcohol use
while taking VIBERZI. Monitor for new or worsening abdominal pain that
may radiate to the back or shoulder, with or without nausea and
vomiting, associated with elevations of pancreatic enzymes. Instruct
patients to stop VIBERZI and seek medical attention if they experience
symptoms suggestive of pancreatitis.

Adverse Reactions

The most commonly reported adverse reactions (incidence &#62 5% and
greater than placebo) were constipation, nausea, and abdominal pain.

LINZESS® and CONSTELLA® are trademarks owned by Ironwood
Pharmaceuticals, Inc. Any other trademarks referred to in this press
release are the property of their respective owners. All rights reserved.

This press release contains forward-looking statements. Investors are
cautioned not to place undue reliance on these forward-looking
statements, including statements about the development, launch and
commercial potential of linaclotide, lesinurad, our product candidates
and the other products that we promote and the drivers, timing, impact
and results thereof; the benefits anticipated from the addition of the
gout franchise to Ironwood's portfolio; market size, growth and
opportunity, including peak sales and the potential demand for
linaclotide, lesinurad and our product candidates, as well as their
potential impact on applicable markets; the potential indications for,
and benefits of, linaclotide, lesinurad and our product candidates; the
anticipated timing of preclinical, clinical and regulatory developments
and the design, timing and results of clinical and preclinical studies;
the potential for, and timing of, regulatory submissions and approvals
for linaclotide, lesinurad and our product candidates; expected periods
of patent exclusivity; the strength of the intellectual property
protection for linaclotide, lesinurad and our product candidates;
potential business development activity and the timing and impact
thereof; our potential for rapid, sustainable, high-margin growth; and
2016 financial performance and results, and guidance and expectations
related thereto, including expectations regarding the need for future
financings, cash flows (including cash use for operations),
profitability, operating expenses, revenue growth, operating leverage,
commercial margin, net sales, cash flow accretion, and marketing and
sales expense. Each forward-looking statement is subject to risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied in such statement. Applicable risks and
uncertainties include the risk that we are unable to successfully expand
our commercial infrastructure to include lesinurad, integrate lesinurad
into our existing business or realize the anticipated benefits of the
lesinurad transaction; those related to the effectiveness of
commercialization efforts by us and our partners; preclinical and
clinical development, manufacturing and formulation development; our
reliance on AstraZeneca to provide critical support services related to
lesinurad; the risk that findings from our completed nonclinical and
clinical studies may not be replicated in later studies; efficacy,
safety and tolerability of linaclotide, lesinurad and our product
candidates; decisions by regulatory authorities; the risk that we may
never get sufficient patent protection for linaclotide and our product
candidates; developments in the intellectual property landscape;
challenges from and rights of competitors or potential competitors; the
risk that our planned investments do not have the anticipated effect on
our company revenues, linaclotide, lesinurad or our product candidates;
the risk that we are unable to manage our operating expenses or cash use
for operations, or are unable to commercialize our products, within the
guided ranges; and the risks listed under the heading "Risk Factors" and
elsewhere in Ironwood's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2016, and in our subsequent SEC filings. These
forward-looking statements (except as otherwise noted) speak only as of
the date of this press release, and Ironwood undertakes no obligation to
update these forward-looking statements. Further, Ironwood considers the
net profit for the U.S. LINZESS brand collaboration with Allergan in
assessing the product's performance and calculates it based on inputs
from both Ironwood and Allergan. This figure should not be considered a
substitute for Ironwood's GAAP financial results. An explanation of our
calculation of this figure is provided in the U.S. LINZESS Brand
Collaboration table and related footnotes accompanying this press
release.

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

June 30,

2016

December31, 2015

Assets

Cash, cash equivalents and available-for-sale securities

$

325,373

$

439,394

Accounts receivable, net

53,147

54,518

Prepaid expenses and other current assets

7,622

6,293

Total current assets

386,142

500,205

Property and equipment, net

17,939

21,075

Convertible note hedges

99,478

86,466

Intangible assets, net and goodwill

186,584

-

Other assets

10,065

11,375

Total assets

$

700,208

$

619,121

Liabilities and Stockholders' Equity

Accounts payable, accrued expenses and other current liabilities

$

36,250

$

36,135

Current portion of capital lease obligations

2,451

2,631

Current portion of deferred rent

7,923

5,544

Current portion of deferred revenue

8,519

7,191

Current portion of long-term debt

35,259

24,964

Current portion of contingent consideration

597

-

Total current liabilities

90,999

76,465

Capital lease obligations

198

306

Deferred rent

4,409

6,395

Deferred revenue

-

1,798

Other liabilities

10,120

10,120

Contingent consideration

87,052

-

Note hedge warrants

86,838

75,328

Convertible notes

227,273

220,620

Long-term debt

111,938

132,964

Total stockholders' equity

81,381

95,125

Total liabilities and stockholders' equity

$

700,208

$

619,121

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2016

2015

2016

2015

Collaborative arrangements revenue

$

54,350

$

27,744

$

120,392

$

56,676

Cost and expenses:

Cost of revenue, excluding amortizationof acquired
intangible asset

—

—

—

12

Write-down of inventory to netrealizable value and loss on
non-cancellable purchase commitments

—

8,150

—

8,150

Research and development

31,682

28,648

63,524

55,289

Selling, general and administrative

36,918

32,955

73,086

63,301

Amortization of acquired intangibleasset

1,065

—

1,065

—

Total cost and expenses

69,665

69,753

137,675

126,752

Loss from operations

(15,315

)

(42,009

)

(17,283

)

(70,076

)

Other (expense) income:

Interest expense, net

(9,532

)

(5,803

)

(19,218

)

(10,958

)

Gain (loss) on derivatives

3,145

(208

)

1,502

(208

)

Other expense, net

(6,387

)

(6,011

)

(17,716

)

(11,166

)

GAAP net loss

$

(21,702

)

$

(48,020

)

$

(34,999

)

$

(81,242

)

GAAP net loss per share—basic and diluted

$

(0.15

)

$

(0.34

)

$

(0.24

)

$

(0.57

)

Three Months Ended

June 30,

Six Months Ended

June 30,

2016

2015

2016

2015

Non-GAAP net loss

$

(23,782

)

$

(47,812

)

$

(35,436

)

$

(81,034

)

Non-GAAP net loss per share (basic and diluted)

$

(0.16

)

$

(0.34

)

$

(0.25

)

$

(0.57

)

Weighted average number of common sharesused in net loss per
share — basic and diluted

144,642

142,098

144,118

141,690

Reconciliation of GAAP Results to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(unaudited)

A reconciliation between net loss on a GAAP basis and on a
non-GAAP basis is as follows:

Three Months Ended

June 30,

Six Months Ended

June 30,

2016

2015

2016

2015

GAAP net loss

$

(21,702

)

$

(48,020

)

$

(34,999

)

$

(81,242

)

Adjustments:

Mark-to-market adjustments on the derivativesrelated to
convertible notes, net

(3,145

)

208

(1,502

)

208

Amortization of intangible asset

1,065

—

1,065

—

Non-GAAP net loss

$

(23,782

)

$

(47,812

)

$

(35,436

)

$

(81,034

)

A reconciliation between diluted net loss per share on a GAAP
basis and on a non-GAAP basis is as follows:

Three Months Ended

June 30,

Six Months Ended

June 30,

2016

2015

2016

2015

GAAP net loss per share - Basic and Diluted

$

(0.15

)

$

(0.34

)

$

(0.24

)

$

(0.57

)

Adjustments to GAAP net loss per share (as detailed above)

(0.01

)

—

(0.01

)

—

Non-GAAP net loss per share - basic and diluted

$

(0.16

)

$

(0.34

)

$

(0.25

)

$

(0.57

)

U.S. LINZESS Brand Collaboration1

Revenue/Expense Calculation

(In thousands)

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2016

2015

2016

2015

LINZESS U.S. net sales

$

150,464

$

112,062

$

287,601

$

207,551

Commercial costs and expenses2

71,556

77,840

133,705

135,991

Commercial profit on sales of LINZESS

$

78,908

$

34,222

$

153,896

$

71,560

Commercial Margin3

52

%

31

%

54

%

34

%

Ironwood's share of net profit

$

39,454

$

17,111

$

76,948

$

35,780

Ironwood's selling, general and administrative expenses4

8,879

8,314

18,032

16,002

Profit share adjustment5

—

(1,150

)

—

(2,370

)

Ironwood's collaborative arrangement revenue

$

48,333

$

24,275

$

94,980

$

49,412

1 Ironwood collaborates with Allergan on the development and
commercialization of linaclotide in North America. Under the terms of
the collaboration agreement, Ironwood receives 50% of the net profits
and bears 50% of the net losses from the commercial sale of LINZESS in
the U.S. The purpose of this table is to present calculations of
Ironwood's share of net profit (loss) generated from the sales of
LINZESS in the U.S. and Ironwood's collaboration revenue/expense;
however, the table does not present the research and development
expenses related to LINZESS in the U.S. that are shared equally between
the parties under the collaboration agreement. For the three months
ended June 30, 2016, net profit for the U.S. LINZESS brand collaboration
with Allergan was $58.3 million, calculated by subtracting $71.6 million
in commercial costs and expenses and $20.6 million in research and
development expenses, from LINZESS U.S. net sales of $150.5 million.

2Includes cost of goods sold incurred by Allergan as well as
selling, general and administrative expenses incurred by Allergan and
Ironwood that are attributable to the cost-sharing arrangement between
the parties.

3Commercial margin is defined as commercial profit on sales
of LINZESS as a percent of total LINZESS U.S. net sales.

4Includes Ironwood's selling, general and administrative
expenses attributable to the cost-sharing arrangement with Allergan.

5Ironwood or Allergan may incur additional expenses related
to certain contractual obligations, resulting in an adjustment to the
company's share of the net profits as stipulated by the collaboration
agreement.